Fischer long shot to head IMF

The governor of the Bank of Israel, Stanley Fischer, has added his name to the list of candidates for the post of managing director of the International Monetary Fund. He has probably the most impressive resume, yet the least chance of ­succeeding.

A globally renowned economist who is credited with stabilising the Israeli shekel during his six years as head of the central bank, Mr Fischer also spent seven years as first deputy managing director of the IMF, and knows the organisation well.

“It was because of this experience that I decided to stand," Mr Fischer said.

But despite his qualifications, even he seemed to acknowledge that he has only a slim chance of being chosen over frontrunner Christine Lagarde, the French Finance Minister. ­Agustin Carstens, the governor of Mexico’s central bank, is also ­campaigning for the job.

“An extraordinary and unplanned opportunity has come up, possibly one that will not come again," Mr Fischer said. He decided to pursue the IMF job, he said, “despite the process being complicated and despite the possible barriers".

Mr Fischer had a distinguished academic career before entering public service, writing numerous economics textbooks and serving as head of the economics department at the Massachusetts Institute of Technology. He was also chief economist at the World Bank from 1988 to 1990. He has private sector experience as a vice-chairman of Citigroup from 2002 to 2005, when he became governor of the Bank of Israel.

“On the basis of his qualifications he is as serious as either of the other two candidates," the chief economist of High Frequency Economics, Carl Weinberg, said. “The work he has done in stabilising the Israeli economy and stabilising prices is viewed as a textbook application of monetary policy."

Still, the obstacles to Mr Fischer’s candidacy are formidable. As he acknowledged, at 67 he already exceeds the age limit of 65 for candidates for managing director, meaning a change in IMF rules would be necessary for him to be elected by the 187 countries that participate in the selection.

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With joint United States and Israeli citizenship, Mr Fischer’s passports work against him. By informal arrangement, the US has supplied the head of the World Bank, while the head of the IMF has come from Europe. In addition, Arab countries might object to an Israeli in the IMF post.

“Stan Fischer would make an ­excellent IMF managing director. But, at this late stage, he does not have enough support to succeed," the economist Nouriel Roubini told ­Reuters. Mr Fischer was voted most suited to run the IMF in a Reuters poll of economists.

Its executive board has set a June 30 deadline for selecting a ­successor to Dominique
Strauss-Kahn
, who quit as IMF managing director last month after being charged with sexual assault and attempted rape of a hotel maid in New York.

Ms Lagarde is highly regarded for her negotiating skills, and has the strong support of Germany, where she enjoys a warm working relationship with Finance Minister Wolfgang Schauble. The fact that she is a woman might also help restore the reputation of the IMF after the arrest of Strauss-Kahn, who denies the charges against him.

Though she is the front runner, Ms Lagarde faces abuse of power charges for her intervention in a court case involving a French tycoon. A French court moved on Friday to postpone a decision on the investigation, removing an immediate hurdle to her candidacy but leaving her open to possible future legal proceedings.

Ms Lagarde has been on a worldwide tour of countries including Brazil, India and China in what appears to be a successful campaign to win support from developing nations, some of which had said it was time for someone from a poorer country to manage the IMF.

“Everybody is free to file a candidacy," Ms Lagarde told reporters in Cairo on Sunday, after meeting Egyptian Finance Minister Samir Mohamed Radwan about her own bid, Bloomberg News reported. She noted that Mr Fischer is experienced, Bloomberg said.

Russia has also nominated Kazakhstan central bank president Grigori A Martchenko.

The deadline for nominations was Friday. Mr Fischer did not say when he had submitted his name.

The IMF assists countries in overcoming financial crises, but typically makes loans contingent on harsh austerity measures. Adroit political skills are crucial for the IMF managing director, which would seem to be another factor in Ms Lagarde’s favour. However, Mr Weinberg of High Frequency Economics noted that Mr Fischer was able to cope with Israel’s fractious politics while pushing for fiscal discipline and cutting inflation.

In Israel, Finance Minister Yuval Steinitz on Sunday said that the country would back Mr Fischer’s candidacy, but also gave him little chance of being chosen.

“First there is the age obstacle," Mr Steinitz told Israel’s Army Radio. “And the choice is very much political. Were it purely professional it would be hard-pressed to find a better person than Fischer."

In a 1987 paper with parallels to the current debt crisis in some European nations, Mr Fischer argued in favour of debt relief for countries in Africa and Latin America. The overly indebted countries had “performed miracles" to try to service their debts, he wrote in The American Economic Review.

“But the price in terms of growth has been heavy," he said. “The time for debt relief has arrived."